California hit by another huge fraud bombshell as thousands of claims for $4BILLION of taxpayers' money paid to sex crime victims were FAKED, investigator says

California has been rocked by another alleged massive fraud scheme that has reportedly seen billions of taxpayer dollars intended for victims of child sex abuse going to people who filed fake claims.

Los Angeles County had agreed in April 2025 to pay more than $4 billion to settle more than 11,000 claims of sexual abuse at county-run juvenile halls, foster homes and a notorious children's shelter.

The claims, many of which stretch back decades, came after the Golden State changed its statute of limitations to give victims who were sexually abused as minors a new window to sue.

But District Attorney Nathan Hochman claimed in a court filing on Wednesday he believes a whopping four out of five claims for which the county is paying the largest sex abuse settlement in American history are fake, the Los Angeles Times reports. 

There was even evidence that some recruiters had paid people to file bogus claims. 

Hochman asked the judge overseeing the bulk of the sex abuse cases to pause the payments for six months while he continues his investigation into the plaintiffs, lawyers and therapists behind the claims in the largest sex abuse settlement in American history.

The pause would only apply to abuse cases stemming from juvenile detention halls, which make up the bulk of the claims. 

Hochman argued in the filing that distributing the money now will hinder his probe 'by complicating witness cooperation [and] obscuring financial trails.'

The District Attorney's Office has been probing the claims since November, following reports that some plaintiffs fabricated stories of sexual abuse - and sometimes were never even in custody at the facilities.

An LA Times investigation in October found nine people who claimed they were paid small amounts of cash by recruiters to sue the county, claiming they were sexually abused in juvenile halls.

They described how a network of individuals approached them on the street and incentivized them to fabricate stories of sexual abuse within the juvenile justice system in exchange for cash payments ranging from $50 to $200.

Those who spoke to the LA Times said they received the payments when they filed a claim specifically with Downtown LA Law Group, one of the main firms involved in the settlement.

One person even claimed a vendor drove them to the law firm's office and paid them cash after the claim was filed.

Some also said they were plied with scripts about what to tell the attorneys once they agreed to file claim. 

Downtown LA Law Group has vehemently denied paying any of its clients to sue, insisting its lawyers only want 'justice for real victims.'

But county officials have ramped up the vetting process of the claims in the months since, appointing a former presiding judge of the county's Superior Court to investigate the cases brought by Downtown Los Angeles Law Group.

The firm is also under investigation by the California State Bar, which is pushing to comb through a list of its roughly 2,700 plaintiffs. 

Hochman, though, seemed to argue in his court filings his office could accomplish more than any of the other inquiries into the alleged fraud, which he said 'has been insufficient to determine whether the claims are fraudulent.'

He noted at a previous press conference that the massive settlement has had a real effect on county operations - noting his own office's budget was slashed by $24 million to help pay out the settlements, according to Knock LA.

'It is not free money,' Hochman said at the time as he vowed to go after the fraudsters.

Yet some of the victims slammed his latest efforts to stall the payouts, as they worry the abuse they suffered has taken a back seat to the fraud allegations.

The victims had expected to receive their payments earlier this year and are now 'beyond frustrated,' said attorney Patrick McNichols, whose firm represents roughly 1,000 claimants. 

'Once again, they're getting victimized,' he argued, noting the payouts are spread out over the course of five years, which he said would give prosecutors sufficient time to investigate the fraud claims as the other victims start getting paid. 

Some of the victims have said they were already pressured by the county's lawyers to bolster their claims of abuse - a difficult task due to a lack of records in the decades-old cases combined with the fact they were children at the time of the alleged abuse.

That puts real victims at the risk of being labeled fraudsters, they argued.

'Who was I supposed to tell?' Karlina Howard asked, rhetorically. 'This is staff and then they tell you "If you tell anybody, you'll never see your family again."'

'We're scared, we're children and we're in a facility that looks like a jail,' she recounted of her time at the now-defunct MacLaren Hall, a children's shelter that has become infamous for its predatory staff.

Howard also questioned how Hochman arrived at the figure that more than 80 percent of the more than 11,000 claims of sexual abuse were fraudulent.

The figure far exceeds what anybody had expected, and Hochman did not explain in the filing how he arrived at that number.

A hearing on the potential delay is now scheduled for Monday. 

The scandal comes just months an anti-fraud task force led by Vice President JD Vance suspended 447 hospices and 23 home health agencies suspected of committing fraud in Los Angeles, costing taxpayers more than $600 million.

Dr Mehmet Oz, the administrator for the Centers for Medicare and Medicaid Services, first alleged members of the city's Armenian community orchestrated a large-scale health care fraud scheme in January.

He posted a video to social media at the time showing him visiting the Van Nuys neighborhood of Los Angeles and pointing to a four-block radius he said is home to 42 hospices - and claiming one business was part of a $16 million fraud scheme.

Oz also alleged in the video that roughly $3.5 billion in hospice and home care fraud has taken place in Los Angeles, and 'quite a bit of it' was run by 'the Russian-Armenian mafia.'

He then claimed there 'has not been a lot of attention on these problems' in California despite the outrage over a massive healthcare scam in Minnesota.

But California Governor Gavin Newsom filed a civil rights complaint with the Department of Health and Human Services in response, accusing Oz of discrimination.

His office argued in the complaint that Oz 'spewed baseless and racially-charged allegations' that risked chilling participation in hospice and home care programs in the Armenian community.

Newsom also noted in the filing that Oz's video has 'already caused real-world harm' by dampening business at an Armenian bakery shown in the video.

The governor further disputed Oz's claims on social media, as he noted that California has revoked more than 280 hospice licenses and banned new licenses starting in 2022 due to fraud concerns.

The Daily Mail has reached out to Hochman, Newsom and the White House for comment.